U.S. patent application number 10/439717 was filed with the patent office on 2003-10-09 for method and system for commodity-based currency for payment of accounts.
Invention is credited to Turk, James J..
Application Number | 20030191708 10/439717 |
Document ID | / |
Family ID | 26687593 |
Filed Date | 2003-10-09 |
United States Patent
Application |
20030191708 |
Kind Code |
A1 |
Turk, James J. |
October 9, 2003 |
Method and system for commodity-based currency for payment of
accounts
Abstract
A system and method for permitting gold or other commodities to
circulate as currency requires a network of system users that
participate in financial transactions where payment is made in
units of gold. The gold is kept in secure storage at a deposit site
for the benefit of the users. The payments in gold are effected
through a computer system having data storage and transaction
processing programs that credit or debit the units of account of
gold held for the account of each system user.
Inventors: |
Turk, James J.; (North
Conway, NH) |
Correspondence
Address: |
ST. ONGE STEWARD JOHNSTON & REENS, LLC
986 BEDFORD STREET
STAMFORD
CT
06905-5619
US
|
Family ID: |
26687593 |
Appl. No.: |
10/439717 |
Filed: |
May 16, 2003 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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10439717 |
May 16, 2003 |
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09340566 |
Jun 28, 1999 |
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09340566 |
Jun 28, 1999 |
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08921760 |
Aug 26, 1997 |
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5983207 |
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08921760 |
Aug 26, 1997 |
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08465430 |
Jun 5, 1995 |
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5671364 |
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08465430 |
Jun 5, 1995 |
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08015588 |
Feb 10, 1993 |
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Current U.S.
Class: |
705/39 |
Current CPC
Class: |
G06Q 20/10 20130101;
G06Q 20/105 20130101; G06Q 20/40 20130101; G06Q 20/28 20130101;
G06Q 30/0601 20130101; G06Q 20/29 20130101; G06Q 30/0607 20130101;
G06Q 20/203 20130101; G06Q 40/025 20130101; G06Q 40/00 20130101;
G06Q 20/3676 20130101; G06Q 40/04 20130101; G06Q 20/02 20130101;
G06Q 20/06 20130101; G06Q 20/1085 20130101; G06Q 20/3678 20130101;
G06Q 20/403 20130101 |
Class at
Publication: |
705/39 |
International
Class: |
G06F 017/60 |
Claims
What is claimed is:
1. An electronic commodity based system for conducting financial
transactions, comprising: at least one deposit site having secure
facilities for storage of a valuable commodity; an inventory of a
valuable commodity stored in said secure facilities at a said
deposit site, said inventory including a quantity of units of said
valuable commodity held at said deposit site for at least one
identified account; a computer system for processing data for
accounting transactions denominated in said units of said valuable
commodity, said computer system having at least one data storage
device and data processing software that records a balance of units
of valuable commodity credited to each said account; said software
being operable to receive records of transactions transferring an
interest in units of said valuable commodity from one account to
another identified account; said records of transactions including
at least an identification of a first account that will receive a
debit, and a second account that will receive a credit, an amount
of the interest in said units of said valuable commodity which is
being credited to said second account, said records of transactions
thereby updating data regarding the balance of units of valuable
commodity credited to each said account; said electronic commodity
based system permitting persons to conduct financial transactions
without reliance on national currencies in conducting said
financial transactions, whereby obligations, of a person receiving
a said debit of said units of said valuable commodity of the
person's account, to an other person receiving a said credit of
said units of said valuable commodity to the other person's
account, are extinguished upon posting of said records of
transactions, thereby eliminating payment risk.
2. A system in accordance with claim 1 wherein said valuable
commodity comprises a precious metal.
3. A system in accordance with claim 2 wherein said precious metal
comprises gold.
4. A system in accordance with claim 2 wherein said precious metal
comprises silver.
5. A system in accordance with claim 3 wherein said gold is
specified to a selected purity.
6. A system in accordance with claim 2 further comprising means for
remote access to submit records of transactions to instantly debit
and credit a person's accounts.
7. A system in accordance with claim 6 further comprising
verification means for verifying the identity of said person
obtaining access to said computer system and for confirming that
said person is authorized to submit records of transactions to said
transaction storage device.
8. An electronic gold based system for conducting financial
transactions, comprising: at least one deposit site having a
protected vault; an inventory of gold stored in said protected
vault at a said deposit site, said inventory including a quantity
of units of gold held at said deposit site for an account of at
least one identified account; a computer system for processing data
for accounting transactions denominated in said units of gold, said
computer system having at least one data storage device and data
processing software that records a balance of units of gold
credited to each said account; said software being operable to
receive records of transactions transferring an interest in units
of gold from one account to another identified account; said
records of transactions including at least an identification of a
first account that will receive a debit, and a second account that
will receive a credit, an amount of the interest in said units of
gold which is being credited to said second account, said records
of transactions thereby updating data regarding the balance of
units of gold credited to each said account; said electronic gold
based system permitting persons to conduct financial transactions
without reliance on national currencies in conducting said
financial transactions, whereby obligations, of a person receiving
a said debit of said units of gold of the person's account, to an
other person receiving a said credit of said units of gold to the
other person's account, are extinguished upon posting of said
records of transactions, thereby eliminating payment risk.
9. A system in accordance with claim 8 further comprising means for
remote access to said computer system to submit and store records
of transactions.
10. A system in accordance with claim 8 wherein said gold is of a
selected purity.
11. A method of payment, using a valuable commodity as a deposit
currency, implemented by a computer system, comprising the steps
of: creating a deposit account data file for each of a plurality of
persons, each said deposit account data file identifying a person,
and a number of units of valuable commodity stored at a deposit
site for the benefit of the person; entering records of
transactions denominated in units of said valuable commodity, said
records of transactions including at least an identification of a
person who will receive a debit, a person who will receive a
credit, the amount of such debit in units of said valuable
commodity, the amount of such credit in units of said valuable
commodity; posting said records of transactions to debit and credit
the deposit account data files of said persons to update said data
identifying a number of units of said valuable commodity held for
the account of each said person; said method permitting persons to
conduct financial transactions without reliance on national
currencies in conducting said financial transactions whereby
obligations, of a person receiving a said debit of said units of
said valuable commodity, to another person receiving a said credit
of said units of said valuable commodity, are extinguished upon
posting of said records of transactions, thereby eliminating
payment risk.
12. A method in accordance with claim 11 wherein said valuable
commodity comprises a precious metal.
13. A method in accordance with claim 12 wherein said precious
metal comprises gold.
14. A method in accordance with claim 12 wherein said precious
metal comprises silver.
15. A method of payment, using an electronic valuable
commodity-based payment system which does not permit fractional
banking, comprising the steps of: using a user computer operably
connected to a communications network to obtain access to the
electronic valuable commodity-based payment system; entering one or
more of an account number and a password to obtain access to a user
account; entering instructions on said user computer to be
transmitted to said electronic commodity-based payment system, said
instructions including a specification of a number of units of a
valuable commodity to be transferred from said user account and an
identification of a recipient to receive payment of a number of
units of the valuable commodity; said method permitting a user to
make a payment without reliance on national currencies in
conducting said financial transactions, thereby eliminating payment
risk.
16. A method in accordance with claim 15 wherein said valuable
commodity comprises a precious metal.
17. A method in accordance with claim 16 wherein said precious
metal comprises gold.
18. A method for facilitating financial transactions, comprising:
recording in memory of a computer system a first balance for a
first account, said first balance representing a first quantity of
a valuable commodity stored at one or more secure deposit sites;
recording in memory of said computer system a second balance for a
second account, said second balance representing a second quantity
of the valuable commodity stored at said one or more secure deposit
sites; receiving a payment instruction at said computer system via
a communications network, the payment instruction specifying a
quantity of the valuable commodity, an account to be debited, and
an account to be credited, wherein the account to be debited is the
first account and the account to be credited is the second account;
in response to receipt of said payment instruction: debiting by the
computer system the first account; and crediting by the computer
system the second account; said method permitting persons to
conduct said financial transactions without using national
currencies, whereby an obligation of the first person to the second
person is extinguished when said second account is credited,
thereby eliminating payment risk.
19. The method of claim 18, wherein the valuable commodity is
gold.
20. A computer program embodied on a computer-readable medium and
comprising code that, when executed on a computer, causes the
computer to perform the following steps: receive payment
instructions denominated in units of electronic gold, said payment
instructions including at least an identification of a person who
will receive a debit, a person who will receive a credit, and an
amount of units of said electronic gold; posting said payment
instructions to debit and credit account data files of said persons
to update data identifying a number of units of said electronic
gold held for each said person; whereby said persons may make and
receive a payment without reliance on national currencies in
conducting said financial transactions, thereby eliminating payment
risk.
21. An electronic commodity-based system for conducting financial
transactions, comprising: at least one deposit site having secure
facilities for storage of a valuable commodity; an inventory of a
valuable commodity stored in said secure facilities at said deposit
site, said inventory including a quantity of units of said valuable
commodity held at said deposit site for at least one identified
account; a computer system for processing data for accounting
transactions denominated in said units of said valuable commodity,
said computer system having at least one data storage device and
data processing software that records a balance of units of said
valuable commodity credited to each said account; said software
being operable to receive payment instructions transferring an
interest in units of said valuable commodity from one account to
another account; said payment instructions including at least an
identification of a first account that will receive a debit, and a
second account that will receive a credit, an amount of units of
said valuable commodity, said payment instructions thereby being
used to update data regarding the balance of units of said valuable
commodity credited to each said account; said electronic
commodity-based system permitting persons to conduct financial
transactions without reliance on national currencies in conducting
said financial transactions, whereby obligations of a person whose
account receives said debit of said valuable commodity to another
person whose account receives said credit of said valuable
commodity, are extinguished upon posting of said payment
instructions, thereby eliminating payment risk.
22. An electronic commodity-based system in accordance with claim
21, wherein the valuable commodity is gold.
23. An electronic commodity-based system for conducting financial
transactions, comprising: one or more secure deposit sites for
storage of a valuable commodity; an inventory of the valuable
commodity stored in said one or more secure deposit sites; a
computer system for processing data associated with transactions
denominated in units of said valuable commodity, said computer
system being adapted to: maintain a plurality of accounts, each
account having a balance representing a quantity of the valuable
commodity stored at said one or more secure deposit sites, wherein
said accounts include a first account associated with a first
person and a second account associated with a second person;
receive a payment instruction via a communication network, the
payment instruction specifying a quantity of the valuable
commodity, an account to be debited, and an account to be credited,
wherein the account to be debited is the first account and the
account to be credited is the second account; in response to
receipt of said payment instruction: debit the first account; and
credit the second account; and said electronic commodity-based
system permitting persons to conduct said financial transactions
without using national currencies, whereby an obligation of the
first person to the second person is extinguished when said second
account is credited, thereby eliminating payment risk.
24. An electronic commodity-based system in accordance with claim
23, wherein the valuable commodity is gold.
25. An electronic commodity-based system for conducting financial
transactions, comprising: one or more secure deposit sites for
storage of a valuable commodity; an inventory of the valuable
commodity stored in said one or more secure deposit sites; a
computer system for processing data associated with transactions
denominated in units of said valuable commodity, said computer
system being adapted to: maintain a plurality of accounts, each
account having a balance representing a quantity of the valuable
commodity stored at said one or more secure deposit sites, wherein
said accounts include a first account associated with a first
person and a second account associated with a second person;
receive a payment instruction via the Internet, the payment
instruction specifying a quantity of the valuable commodity, an
account to be debited, and an account to be credited, wherein the
account to be debited is the first account and the account to be
credited is the second account; in response to receipt of said
payment instruction: debit the first account; and credit the second
account, and said electronic commodity-based system permitting
persons to conduct said financial transactions without using
national currencies, whereby an obligation of the first person to
the second person is extinguished when said second account is
credited, thereby eliminating payment risk.
26. The system of claim 25 wherein the valuable commodity is
gold.
27. A method of payment, using an electronic gold based payment
system which does not permit fractional banking, comprising the
steps of: using a user computer operably connected to a
communications network to obtain access an electronic gold based
payment system; entering one or more of an account number and a
password to obtain access to a user account; entering instructions
on said user computer to be transmitted to said electronic gold
based payment system, said instructions including a specification
of a number of units of electronic gold to be transferred from said
user account and an identification of a recipient to receive said
payment of a number of units of electronic gold; said method
permitting a user to make a payment without reliance on national
currencies in conducting said financial transactions, thereby
eliminating payment risk.
28. A method in accordance with claim 27 wherein said
identification of a recipient is an identification of a recipient
account number.
29. An electronic gold based payment system which does not permit
fractional banking, comprising: a user computer operably connected
to a communications network; means for entering one or more of an
account number and a password to said user computer to obtain
access to a user account; means for entering instructions on said
user computer, said instructions including a specification of a
number of units of electronic gold to be transferred from said user
account and an identification of a recipient to receive said
payment of a number of units of electronic gold; said system
permitting a user to make a payment without reliance on national
currencies in conducting said financial transactions, thereby
eliminating payment risk.
30. A method in accordance with claim 29 wherein said
identification of a recipient is an identification of a recipient
account number.
Description
RELATED APPLICATIONS
[0001] This is a continuation application of co-pending U.S. patent
application Ser. No. 09/340,566 filed 28 Jun. 1999 entitled
"Electronic Cash Eliminating Payment Risk" which is a divisional
application of U.S. patent application Ser. No. 08/921,760 filed 26
Aug. 1997 (now issued as U.S. Pat. No. 5,983,207) entitled
"Electronic Cash Eliminating Payment Risk", which is a continuation
in part of application Ser. No. 08/465,430, filed 5 Jun. 1995 (now
issued as U.S. Pat. No. 5,671,364) entitled "Method and Systems for
Commodity-Based Currency for Payment of Accounts and Elimination of
Payment Risk"; which is a continuation in part of application Ser.
No. 08/015,588, 10 Feb. 1993 entitled "Method and Systems for
Commodity-Based Currency for Payment of Accounts"; now
abandoned.
FIELD OF THE INVENTION
[0002] This invention relates to electronic transaction systems,
and more specifically to a system using an asset-based electronic
cash system, for settlement of payment obligations.
BACKGROUND OF THE INVENTION
[0003] In the historic past, precious metals circulated as
currency. The metals circulated mainly in the form of coins, and
over time improvements were made to coins to improve their
reliability. These improvements included, for example, detailed
engraving on the face and obverse of the coin, and milling of
edges. These improvements were intended to prevent the clipping of
coins, which was a process that lightened the weight of the coin.
When this practice occurred, the coin was debased, i.e., it lost
purchasing power because the coin no longer constituted the weight
of gold it was purported to constitute.
[0004] The circulation of precious metals coins was in time
supplanted by certificates during the period from 1680-1840. By
this method of currency, the coins of precious metal remained in
safe and secure storage, typically a vault facility maintained by a
bank or warehouse company. A certificate of deposit, a paper
document, was issued by the bank or warehouse company and evidenced
the deposit of coin that had been made into the facility, and the
certificate of deposit began circulating as a substitute for the
coin. Circulation of the certificate, in lieu of the coins, offered
numerous advantages. Paper was easier to transport, and a
relatively small amount of certificates could be used to complete
transactions of high value. There was less risk of debasement of
the coin that was stored. However, while these advantages
significantly improved the circulating medium, there were also
disadvantages. These included forgery of paper certificates, fraud
and bankruptcy of the bank or warehouse company.
[0005] As a result, another improvement to currency soon emerged.
This improvement in the nature of currency was the creation of
deposit currency. Deposit currency is a process that enables paper
money and/or coin to circulate as currency. By this method of
currency, the coins of precious metal and/or the paper currency
that represented a claim to those coins, remained in safe and
secure storage, typically a vault facility maintained by a bank.
Circa 1840 to the present, the circulation of coin and paper money
for commercial transactions was supplanted by deposit currency,
i.e., money is now moved around mainly by checks and wire
transfers.
[0006] The creation of deposit currency significantly improved the
circulating medium. It was no longer necessary to extensively rely
on coins, which could be clipped, debased, etc., nor on paper
money, which could be counterfeited. By moving monetary units of
account on deposit in one bank to another bank, the process of
payments was significantly enhanced.
[0007] However, in time unforeseen problems have appeared which
detract from the use of deposit currency as a medium of exchange.
The institutions in which clients lodge their money and deposit
currency sometimes are unable to meet their commitment to their
clients to return the clients' coin or paper money. The
institutions, typically banks, which accept the deposits of coin
and paper money from their client, loan the coin and paper money to
other clients. Occasionally these borrowers failed to repay their
loans, causing the bank to take a loss. Cumulatively these losses
can be large enough to cause the bank to fail. A bank in that case
no longer has sufficient coin or paper money to repay its
liabilities to its clients.
[0008] The above described scenario constitutes what is known as
"payment risk." As illustrated above, payment risk arises in
conventional banking systems where a financial institution accepts
deposits, then in turn loans out that money to others. This is
known as "fractional banking," in that the financial institution
only keeps on hand a fraction of the actual assets it is holding
for the account of its depositors. If the financial institution
fails due to bad loans or fraud, the financial institution lacks
sufficient assets to pay off its depositors. This practice has lead
to significant losses in connection with financial institution
failures such as at the Herstatt Bank in Germany and the BCCI
scandal.
[0009] A related payment risk arises due to the fluctuating value
of national currencies due to inflation and currency exchange rate
variations dependent on the economy of the nation issuing the
currency. Thus, there is a risk inherently associated with the use
of national currencies.
[0010] A further problem of current payment systems is the problem
of "float." "Float" is the amount of time a payee must wait for a
transaction to be processed. This is considered an expense because
of the unavailability of funds, which represents opportunity
costs.
[0011] In order to eliminate these payment risks and float, I have
invented a system which uses an asset (like gold) instead of a
liability (national currency) for settling payments.
SUMMARY OF THE INVENTION
[0012] It is an object of the invention to provide a method and
system for a commodity-based currency for payment of accounts that
avoids the problems of prior art and deposit currency account
systems. It is an object of the invention to provide such a system
and method which is independent of external events that cause
fluctuations in value of national currencies. It is an object of
the invention to provide such a system and method that permits gold
and other commodities to circulate as deposit currency.
[0013] In accordance with one embodiment of the invention, a
commodity based currency system for paying accounts comprises: at
least one deposit site having secure facilities for storage of a
valuable commodity; an amount of a commodity stored at the deposit
site; and a computer system for implementing and recording
transactions defined in units of the commodity. The accounting of
the transactions is denominated in units of the commodity. The
computer system includes: an account data storage device, a
transaction data storage means, and a transaction posting means.
The account data storage device is capable of recording data
identifying persons and a number of units of the commodity credited
to each of the persons and held in the deposit site for the account
of the persons. The transaction data storage device receives
records of transactions denominated in units of the commodity.
These records of transactions include an identification of a person
who will receive a debit, a person who will receive a credit, the
amount of such debit, the amount of such credit, and the identity
of the deposit site. The transaction posting means extracts data
from the records of transactions and posts debits and credits to
the account data storage device to update the data identifying the
number of units of the commodity held for the account of each
person involved in the transaction.
[0014] The system preferably permits remote access to submit
transaction records, and provides verification means for verifying
the bona fides of the person seeking to submit transaction records.
A remote terminal is provided at the deposit site to enter
information regarding the commodity held at the deposit site for
the account of a person.
[0015] In a preferred embodiment, the commodity comprises a
precious metal, such as silver, or most preferably, gold of a
specified purity.
[0016] Other objects, aspects and features of the present invention
in addition to those mentioned above will be pointed out in or will
be understood from the following detailed description provided in
conjunction with the accompanying drawings.
BRIEF DESCRIPTION OF THE DRAWINGS
[0017] FIG. 1 is a schematic illustration of the operation of the
invention.
DESCRIPTION OF THE PREFERRED EMBODIMENT
[0018] I hereby incorporate by reference my prior patents, U.S.
Pat. Nos. 5,671,364; 5,983,207; and 6,415,271, in their
entirety.
[0019] A glossary of the terms used in the present application is
provided hereafter.
[0020] As used herein, a "computer system" comprises at least the
following components: a central processing unit (CPU), a display
device, a data storage device, and a printing capability.
[0021] As used herein, "money" is a tool that enables the
participants in an exchange of goods and services to define value
of the exchange.
[0022] As used herein, "currency" means the physical representation
of money. Currency is the medium of exchange enabling producers and
consumers to exchange goods and services indirectly for other goods
and services. Currency is denominated into units of account, which
permits economic calculation by the participants in the exchange.
Currency also is a means of payment which enables the participants
in an exchange to settle their respective obligation.
[0023] As used herein, "cash currency" is the paper notes issued by
a country's central bank. Each note is denominated in terms of a
fixed number of units of account.
[0024] As used herein, "deposit currency" is the liability of the
banks that accept deposits of a country's national currency.
[0025] As used herein, a "clearing house" is a center for
processing transactions to credit and debit accounts held by
parties to the transaction.
[0026] This invention relates to a system and method for payment
and receipt of monetary units of account. More specifically, it
relates to a clearing house 10 that is the center of an interactive
communications network that will enable gold and/or other
commodities to be used and freely exchanged as a means of payment,
i.e., to be used as currency.
[0027] The clearing house is intended to develop an extensive user
base located within the United States and globally that will use
gold and/or other commodities as a currency for effecting payments
in cross-border as well as intra-country commercial transactions.
Since this currency is preferably a defined weight of gold or other
commodity, the currency of the clearing house will be
non-national.
[0028] Each system user individually establishes a depository
account with the clearing house either by storing gold or other
commodity at an affiliated deposit site 22 or by purchasing gold or
other commodity already stored at such a deposit site. The deposit
site will confirm the deposit of the commodity to the clearing
house and transmit the information via remote terminal 24 to the
computer system 26 described hereafter. Each account will be
denominated in the currency of the clearing house, which is a
defined quantity of gold or other commodity (for example, ounces,
or kilograms of gold, barrels of oil, etc.). Every system user that
establishes an account relationship with the clearing house will
become a participant in the network of system users using the
payment processing capability provided by the clearing house.
[0029] The network of individuals, corporations and other entities
that are clients of the clearing house will use communications and
information processing technology made available to them by the
clearing house to effect transactions in the commodity denominated
currency of the clearing house. They will (1) make payments to
other members of the network, generally their suppliers, and (2)
collect payments from other members of the network, generally their
customers.
[0030] Though it is envisioned that the clearing house will
initially establish working relationships with corporations
involved in international trade and commerce, the economies of
scale that will be generated by an increasing number of
transactions completed through the clearing house means that in
time the scope of the clearing house activities can be broadened to
include transactions by individuals. The high volumes of payments
and receipts now undertaken daily in the course of normal economic
activity indicate that the potential opportunities for the
application of this invention are very significant.
[0031] This invention therefore provides a system and method of
settling of payments for transactions through a clearing house with
a global scope of operation (hereafter referred to as "Global
Clearing House" or "GCH").
[0032] The advantages that GCH will offer system users, which
differentiates its services from other payments mechanisms now
available, include (1) the ability to complete a payment without
incurring the risk now inherent in existing mechanisms used to
complete payment transactions, (i.e., possible loss of funds
deposited in a bank which is seized or which is insolvent), (2) the
ability for a client to receive immediate credit and to be
immediately informed that monetary units of account have been added
to the account kept by the client at GCH, (3) the ability for a
client to make immediate payment and to be immediately informed
that monetary units of account have been deducted from the account
kept by the client at GCH, (4) the ability of a client to maintain
monetary units of account on deposit without being exposed to the
practice of fractional reserve banking (wherein banks do not keep
as a reserve assets equal to the amount and identity of their
liabilities) and thereby avoid the risks of partial or total loss
of the deposit as a result of the overissue of the currency (where
banks create liabilities for currency based on assets which they do
not have on hand), (5) the ability of a client to maintain monetary
units of account on deposit without being exposed to the risk that
those monetary units of account will be loaned by the institution,
and (6) the ability to use gold and/or other commodities as
currency.
[0033] Gold is the preferred commodity as it is a low-risk medium
of payment and it has a known value. Gold extinguishes the
obligation arising from a transaction in trade and commerce. When
the seller receives gold, there is no further obligation because
the product sold has been exchanged for a tangible asset. However,
a national currency does not necessarily extinguish the obligation
incurred when the buyer acquires a product. The seller does not
receive a tangible asset. When the seller instead receives a
national currency, the seller receives a promise to pay, which is
principally dependent upon the central bank which issues the
national currency. The obligation can be further at risk if the
payment clearing bank is unable to meet its obligations to deliver
the currency specified in a transaction.
[0034] Using gold as currency also permits the creation of
financial instruments and futures contracts denominated in terms of
a stated weight of gold. For example, a futures contract for
delivery of soybeans could be designated payable in gold units of
account instead of in U.S. Dollars. Other commonly traded
commodities, i.e., crude oil, agricultural products, etc., could be
similarly designated in gold units of account. The transactions
would then be processed and cleared through GCH.
[0035] The above advantages differentiate the commodity currency
processed by GCH from any deposit currency now in use.
[0036] Referring now to FIG. 1, a commodity based currency system
for paying accounts in accordance with the invention comprises: at
least one deposit site; an amount of a commodity stored at the
deposit site; and a computer system for implementing and recording
transactions defined in units of the commodity.
[0037] The Deposit Sites
[0038] Preferably there are several deposit sites for storing the
commodity. The deposit sites are preferably located in countries
having secure and stable political systems where there is minimal
risk of misappropriation of the asset by the government or private
persons. The deposit site will typically be a bank; however, other
secure vault facilities could also serve as the deposit site.
Typical site locations would be London, New York, Zurich and Tokyo,
as well as other locations.
[0039] The deposit site provides facilities for safe and secure
storage of the commodity to be used for currency. Typically such
deposit site consists of a protected vault. The bank or protected
vault that is servicing the GCH system users will preferably have
the ability to (1) receive the commodity from a client, (2) return
the commodity to a client, (3) test the purity of the commodity,
(4) measure the weight and/or other physical properties of the
commodity, (5) provide identifying information for each parcel of
the commodity placed within the deposit site in order to
distinguish between the different parcels belonging to the
different clients of the deposit site, (6) report to the client the
quantity of the commodity stored by the client at the deposit site,
and (7) provide identifying information and the capability to
physically separate from the total quantity of the commodity stored
in the deposit site those parcels of the commodity to be designated
for use as currency. These functions can be provided by the bank or
vault or by trusted service providers.
[0040] The Commodity
[0041] The commodity must be non-perishable, and most preferably
has a high ratio of value to weight and volume. In a preferred
embodiment, the commodity comprises a precious metal, such as
silver, or most preferably, gold of a specified purity. However,
several other commodities, notably crude oil and other petroleum
products may also serve as the commodity used to designate units of
account in the system.
[0042] Gold has three unique advantages as money. Each of these are
inherent to gold, and they are not advantages available to any
national currency.
[0043] When defined to a precise weight, gold is a consistent and
unvarying unit of account. An ounce of gold is knowable and
unvarying. An ounce today is the same as an ounce yesterday or an
ounce twenty years ago. However, a national currency does not have
these characteristics. A U.S. Dollar or a Deutschemark or a Swiss
Franc on deposit in Bank AAA is not the same as the same currency
on deposit at Bank CCC because these two banks have different
levels of capital and a different mix of assets. Therefore, Dollars
or other currencies on deposit in these unrelated institutions have
entirely different levels of risk, so the national currency is not
a consistent and unvarying unit of account.
[0044] Gold is non-national money, which means that it is outside
the scope of government. Therefore, gold is not subject to the
political process because it is beyond the control of governments,
their central banks and monetary authorities. The result is that
gold over long periods of time tends to hold its purchasing power
better than any national currency. And as set forth above, gold
extinguishes an obligation on delivery.
[0045] Opening of an Account
[0046] The system and process of the invention require system users
to establish account relationships with GCH. The account
relationship is confirmed when a system user deposits gold with GCH
in one or more of GCH's approved depositories. A system user makes
a gold deposit or purchases another person's gold deposit and does
so at a specific site. The deposit site then notifies the GCH by
data transmission of the identity of a person and units of gold
held for the account of that person that gold is available for
settling transactions for the benefit of that user.
[0047] In particular, additions of currency to the system will be
made in the following way: (1) the system user transfers a quantity
of the commodity to be used as currency to a deposit site; or (2)
the system user notifies the deposit site to earmark all or part of
the quantity of the commodity stored at the deposit site by the
user. In the first case, the deposit site verifies the receipt of
the commodity and provides confirmation to the system user and GCH
specifying the quantity and/or other physical attributes of the
commodity. In the second case, the deposit site separates the
earmarked parcels of the commodity to be used as currency in a
separate area of the deposit site designated solely for use of
storing earmarked parcels of the commodity comprising the currency
of the GCH. Once the physical transfer is completed, the deposit
site notifies the GCH that the commodity has been established as
currency by the system user.
[0048] The GCH then credits the account previously established by
the system user at the GCH with the quantity of the commodity
specified by the system user which has been established as currency
and has been credited to the account of the system user. Once
established in this way, the commodity earmarked at the deposit
site becomes eligible for use as currency, and the system user may
transfer all or part of the commodity units of account to another
account within the system.
[0049] The balance sheet of GCH reflects (1) the cumulative
deposits of its system users, which are liabilities of GCH, and (2)
the identical amount of gold as its assets. GCH's financial
position is presented in Table No. 1.
1TABLE No 1 GCH Balance Sheet Before Transactions Assets
Liabilities Gold Stored in London 100 oz. Client A 100 oz. London
Gold Stored in Zurich 100 oz. Client A 100 oz. Zurich Gold Stored
in New York 175 oz. Client B 175 oz. New York 375 oz. 375 oz.
[0050] The Computer System
[0051] Once a system user establishes an account relationship with
GCH, the user has access to an interactive communications network
giving access to a computer system. When two system users enter
into a trade transaction between themselves, they effect payment
through this network. In a typical implemntation of the invention,
the interactive communications network is the internet.
[0052] The GCH computer system is adapted for storing of data and
entering the accounts and the transactions affecting the accounts
of the participants in the system. Each GCH system user is provided
with the means to conduct transactions in the user's account
maintained with the GCH. Each account typically includes the name,
address and other identifying information of the account holder, a
unique account number assigned to each account, an inventory of
transactions conducted through each account, and the means to
verify the accuracy and authenticity of each transaction conducted
for an account when instructed by the account holder. In logging to
the system, the user will typically use an account number to
identify himself, and will use a password as verification to gain
access the account.
[0053] The computer system thus includes an account data storage
device, a transaction data storage means, and a transaction posting
means.
[0054] The account data storage device is capable of recording data
identifying the system user and a number of units of the commodity
credited to the user and held for the account of the user.
[0055] The transaction data storage means receives and stores
records of transactions which are denominated in units of the
commodity. These records of transactions include an identification
of a system user who will receive a debit, a system user who will
receive a credit, the amount of such debit, the amount of such
credit, and, optionally, may also identify the identity of the
deposit site.
[0056] The transaction posting means extracts data from the records
of transactions and posts debits and credits to the account data
storage device to instantly update the data identifying the number
of units of the commodity held for the account of each person
involved in the transaction.
[0057] The system includes a remote terminal 24 at the deposit site
22 for receiving and sending data to the computer system upon
opening or closing of an account and/or when there is a transfer of
units of gold. The data is transmitted from the deposit site to the
transaction data storage device and includes an identification of
units of the commodity 20 held at the site for the account of such
person.
[0058] The system preferably permits remote access from client
terminals 26 to submit transaction records to the system 10, and
provides verification means for verifying the bona fides of the
person seeking to submit transaction records. This permits the user
access to the computer system through an interactive communications
network from a location remote from either the GCH or the deposit
site.
[0059] Typically, the account holder will use a computer which
instructs a modem which provides access to the computer system by
dialing telephone numbers available to the GCH system users; or
will access the system via an encrypted internet connection. Once
the centralized computer of the GCH 10 is accessed in this way and
once entry is made by providing a series of passwords or security
codes to prevent unwarranted and unwanted access, the GCH client
has access to the chosen account to which it is the account holder.
Once access has been granted, the account holder may review the
account, conduct transactions for the account, review past
transactions or other data stored by the centralized computer for
the account.
[0060] Access to the centralized computer of the GCH permits real
time, instantaneous transfers of units of account. To transfer
units of account of the commodity in order to complete a financial
obligation, the system user (hereafter the "paying client")
instructs the GCH (1 ) to debit from the paying client's account a
specified quantity of the commodity, (2) the day and time the
specified quantity of the commodity is to be transferred, (3) the
account number and other verifying information to specify the
identity of the client (hereafter the "receiving client") to whom
the payment will be made. A password may optionally be required at
the time of posting a transaction, in order to provide security and
protection from unauthorized transactions, however, in most
instances, the use of a password at logon to the system will be
considered sufficient.
[0061] The centralized computer of the GCH collects the transfer
instructions provided by the paying client and enters those
instructions into a transaction file maintained to record the
authorized transactions for all paying clients. When the appointed
day and time is reached, the centralized computer of the GCH
completes the transaction by debiting the account of the paying
client for the quantity of the commodity instructed by the paying
client, and simultaneously credits the account of the receiving
client instructed by the paying client. The credit made to the
account of the receiving client is made simultaneously as a debit
of the account of the paying client. Once the credit of the
commodity units of account is made to the designated account of the
receiving client, the receiving client has immediate access to
those commodity units of account, thereby extinguishing the
obligation of the paying client to the receiving client.
[0062] For example, A and B enter into a transaction in which A
agrees to purchase from B a specific good/service. The price is
agreed between them to be 25 ounces of gold. GCH is then instructed
by A to debit A's account for 25.0000 ounces and pay this amount to
B's account. Accounting of gold in ounces should be to at least
four decimal points, though five or more decimal points could be
used if greater precision in the measurement of value in the
exchange is required.
[0063] GCH confirms immediate payment to both A and B. The gold is
not moved from the storage facility. It remains in the same
location, but it is now stored there by GCH for the account of B
instead of A. This changed position is presented in Table No.
2.
[0064] The total assets and liabilities of GCH remain unchanged.
Only the composition of the liabilities changes, and it only
changes after GCH performs its payments function.
[0065] The net result of this transaction is that gold is
circulating as currency. Gold is used as a monetary unit of account
in a transaction of trade and commerce entered into between A and
B, and it therefore is circulating as currency even though it
remains in safe and secure storage.
2TABLE No 2 GCH Balance Sheet After Transactions Assets Liabilities
Gold Stored in London 100 oz. Client A 100 oz. London Gold Stored
in Zurich 100 oz. Client A 75 oz. Zurich 175 oz. Client B 25 oz.
Zurich Gold Stored in New York 175 oz. Client B 175 oz. New York
375 oz. 375 oz.
[0066] GCH uses a tangible asset (i.e., a defined weight of gold)
as the basic monetary unit of account. GCH is a clearing house with
assets that are identical to its liabilities. In other words, GCH
does not monetize debts and thereby turn the debt obligations of
borrowers into currency. GCH will have on hand as an asset the
total weight of gold it owes to its depository clients. The
Monetary Balance Sheet of GCH is substantially different than that
of the Dollar, any national currency, or any existent bank as shown
in Table 3.
3TABLE No 3 Monetary Balance Sheet of Global Clearing House
(Denominated in Units of Account Called Ounces) "Quality of Money"
"Quantity of Money" Assets Liabilities Gold Stored in Secure
Storage 375 oz. Client Deposits 375 oz. 375 oz. 375 oz.
[0067] In contrast to any national currency, the "quality of money"
is identical to the "quantity of money" on the balance sheet of
GCH. This common identity of assets and liabilities illustrates a
unique advantage available to users of the invention. Identical
assets and liabilities provides certainty that payments will be
made as directed and without risk.
[0068] Closing of an Account
[0069] A system user can subsequently "cash out" of the GCH system
by either (1) selling his gold interest to another; (2) withdrawing
the user's gold deposited at a deposit site. At this point, the
deposit site will notify the GCH that the system user's gold units
of account are no longer available to the system, for example, by
entering information in the remote terminal at the deposit
site.
[0070] In summary, the invention comprises an electronic commodity
based system for conducting financial transactions, comprising: (1)
at least one deposit site having secure facilities for storage of a
commodity; (2) an inventory of a valuable commodity stored in the
secure facilities at a deposit site, with units of the valuable
commodity held at the deposit site for an identified account; and
(3) a computer system for processing data for accounting
transactions denominated in units of the commodity. As would be
understood, the identified account can be owned by an individual or
a legal entity, such as a corporation, limited liability company,
or partnership, or a government. The account can be "identified"
simply by an account number, such as has been provided by so-called
"numbered" Swiss or Caribbean bank accounts, or by a more complete
information set specifying name, address, contact etc. The
identification must be such to allow debiting and crediting of the
proper parties to any transaction. It should be noted that the
units held for an identified account can be a direct holding, e.g.,
specific units of commodity held at a specific site can be held for
a specific account, or a group of units of commodity can be held
for a group of accounts, or an indirect holding, e.g., the units of
commodity held at one or more sites can be held in a trust for the
benefit of all of the accounts open in the system.
[0071] The computer system has data storage devices such as a hard
drive, optical drive, RAM memory devices, flash memory devices,
optical storage units or the like, and data processing software
that records a balance of units of commodity credited to each
account. The software receives records of transactions transferring
an interest defined in units of the commodity from one account to
another identified account. The records of transactions include at
least an identification of an account that will receive a debit, an
account that will receive a credit, an amount of a debit of a
quantity of said units of said commodity, and an amount of a credit
of a quantity of said units of said commodity. These records of
transactions are entered to update data regarding the balance of
units of commodity credited to each account. The electronic
commodity based system permits persons to conduct financial
transactions without reliance on national currencies in conducting
said financial transactions whereby obligations, of a person
receiving a said debit of said units of said commodity of the
person's account, to an other person receiving a said credit of
said units of said commodity to the other person's account, are
extinguished upon posting of said records of transactions, thereby
eliminating payment risk.
[0072] It is to be appreciated that the foregoing is illustrative
and not limiting of the invention, and that various changes and
modifications to the preferred embodiments described above will be
apparent to those skilled in the art. Such changes and
modifications can be made without departing from the spirit and
scope of the present invention, and it is therefore intended that
such changes and modifications be covered by the following
claims.
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